N216b subsidy: Senate seeks sanction against NNPC officials

The Senate yesterday resolved to demand sanction against officials of the Nigerian National Petroleum Corporation (NNPC) involved in illegal payment of fuel subsidy in 2017.

The upper chamber said over N216.9 billion was frittered away by NNPC officials under the guise of payment for oil subsidy.

It also asked the NNPC to halt forthwith illegal payments without appropriation.

It mandated state-owned oil firm to make a formal request to the National Assembly for appropriation for the illegal payments.

These are part of the recommendations of the Senate Public Accounts Committee in its report on the investigation into alleged illegal subsidy payments.

The recommendations were adopted by the Senate in plenary yesterday.

Chairman of the committee, Matthew Urhoghide, who presented the report, noted that the Federal Government spent N3.8 trillion on subsidy between 2010 and 2016.

The Senate asked its Committee on Appropriation as well as Public Accounts to liaise with the Executive to submit the appropriation for subsidy to be included in the 2018 budget estimates.

The Auditor General of the Federation, it said, should carry out a forensic audit of NNPC’s account over the last five years.

Other recommendations of the committee also adopted included the need for the Federal Government to pay oil marketers the outstanding subsidy arrears owed them prior to 2017 as well as giving local refineries maximum attention to enable them function in optimal capacity.

Senator Urhoghide said: “The NNPC declared operating losses in 2018. Why can’t we have functional refineries in Nigeria for our produce? A lot of money has gone into turn-around maintenance of old refineries. Why can’t we just build new ones?

Senator Victor Umeh noted that “we first have to tackle the corruption in this area so that Nigerians can benefit fully from it.”

Senators George Akume, Chukwuka Utazi and Binta Masi Garba in their separate contributions expressed concern about the recommendations of the committee.

They noted that there was no serious sanction for those who approved payment of the subsidy without recourse to the National Assembly.

Senator Utazi specifically said: “The 2018 budget has no provision for subsidy. We cannot live a lie here. What is the role of the Minister of Finance and who does the Ministry of Petroleum Resources report to? This has to be addressed.”

Senator Godswill Akpabio wondered NNPC’s operational costs that they can throw away N216 billion in a year without asking for a refund? The NNPC needs to be indicted.”

The panel chairman who gave breakdown of the N3.8 trillion subsidy payment, said while the government spent N491 billion in 2010, it paid N245 billion in 2011 and N888 billion in 2012.

Other payments, the panel said were N1.9 trillion in 2013 and 2014, N100 billion in 2015 while 2016 gulped N150 billion.

It said: “In 2017, NNPC imported 9.8 billion litres of Premium Motor Spirit at the cost of $5,483,634,448.91 amounting to N1,672,508,506,917.55 at the exchange rate of N305. In the previous years, all importers including the Nigerian National Petroleum Corporation had collected subsidy for differentials.”

The panel concluded: “It is therefore curious that NNPC will in year 2017, describe the differentials as ‘operating cost’ and a loss but will not demand for refund.”

Senate President, Abubakar Bukola Saraki said it was obvious that the NNPC had constituted the body as law onto itself.

Saraki added that the corporation had continued to engage in monumental illegality by taking the law into their hand.

He said the law is clear that no money should be spent without appropriation.

Saraki said: “As some of you know I spent a lot of time on the issue of subsidy in the seventh Assembly. The recommendation on illegal payment is what is creating the problem because they are requesting for appropriation for illegal payments. The appropriation we are asking for is appropriation for 2018. The issue of illegal payment, that is a different subject matter on its own which we can decide how we are going to address.

“The important thing is that NNPC cannot continue going forward making those payments without appropriations because definitely there is subsidy going on now and it needs to be backed by law which has always been the case since 1999. There has been appropriation for fuel subsidy.

“It stopped briefly, but now NNPC is using the absurd word ‘Operational Costs’ to justify this expenditure — and we all know this is not operational cost, this is fuel being imported. How that becomes operational cost is even an insult on the integrity of Nigerians.

“I think we need to bring up the issue of legality. This is because, when the IMF sees these kinds of reports, it is an embarrassment to us as a country. There are two issues here, illegal payments that have been made is one.

“Going forward, for 2018, we should put the figure that will capture the entire subsidy for 2018 so that when they do make these payments, they are no longer illegal payments as it will be backed by an appropriation. If we agree that they should pay outstanding arrears, then Government will put that as part of the subsidy.

“We are coming to the end of the budget exercise and that is my concern. It is better we quickly rectify this for the 2018 budget and stop the deception to Nigerians and do the right thing. By doing the subsidy also it means private companies will participate and it will even be more efficient.

“Now, the NNPC is the only importer of PMS and Government has never been an efficient agency anyway. Who knows, if private sector are importing, the subsidy might even come down.

“Distinguished Colleagues if we agree, let us move to the recommendations and on the issue of sanctions we can talk about additional prayers. We were hoping that today, Thursday, the Appropriations Committee will submit their report.

“They were planning to lay it sometime next week. If we can quickly get government to come with a figure and we know that item is in budget, that stops this illegal payment going forward.”

Additional recommendations adopted by the Senate included:1. The NNPC should stop the illegal payments without appropriation henceforth; 2. The NNPC through Mr. President, should make a formal request to the National Assembly for 2018; 3. There is need for the Federal Republic to pay all marketers their standing arrears of subsidy owed in 2017; 4. Local refineries should be given maximum attention to enable them function in full capacity; 5. The DG should carry out a full audit on the NNPC; and 6. Direct the committee to recommend appropriate sanctions for officers and personnel who have carried out this illegal payment.”

Saraki said that “If the report from the Auditor General is not satisfactory, then we can talk about setting up an Ad-hoc Committee.

“We also need to ensure that the Office of the Auditor General is properly funded in the 2018 budget so that they can carry about these jobs properly. Chairman Appropriations should follow up to ensure that the Government submits the budget for the fuel subsidy over the next few days so it can be submitted to us next week.